This OIG report estimates Medicare payment error rates for fiscal year 2002. The overall rate remained at 6.3% (the same as FY 2001). The report includes a description of the methodology used to establish error rates.

Overall error rates have remained constant since 1998, but the amount of each type of error varies considerably. Whenever documentation errors fall, medical unnecessary services errors increase. In years when better documentation is provided, OIG found more medically unnecessary services, and the overall rate of error did not change.

“If sampled providers failed to provide documentation or submitted insufficient documentation, the contractors or OIG staff requested supporting medical records at least three times—and, in most instances, four or as many as five times—before determining that the payment was improper.” In other words, providers had ample opportunity to create falsified medical records to match falsified claims, although in some cases reviewer made onsite visits to collect documentation.

The study found certain coding problems with very high error rates. What is most surprising is that these codes have had very high error rates since the first study in 1996 and only one of them decreased this year. CPT Code 99233 (subsequent hospital care) had a 76.3 percent error rate, up from 42% last year. CPT Code 99214 (office or other outpatient visit) had a 23.1% error rate, down from 31.3% in 2001. CPT Code 99232 (subsequent hospital care) increased to 36.7% from 15.1%. It is possible that provider education about coding reduced honest mistakes for these codes, resulting in lower incidence of the codes, but having little impact on the error rate for the codes.